Saturday, February 4, 2012

Did Builders Overbuild Oversized Houses?

Forty-three percent of Americans like big, suburban homes, but the majority prefers condos, apartments, and smaller homes, Chris Nelson, who heads the University of Utah’s Metropolitan Research Center, said at a smart growth conference this week.

Nelson said that there needs to be less building of large homes and more concentration on constructing smaller houses and attached residences to meet future demand.

"Is it any wonder that suburban homes are plummeting in price, because there is far less demand of those homes than in the past?” Nelson told a crowd at the New Partners for Smart Growth conference in San Diego this week. "We are out of balance in terms of where the market is right now, let alone trending toward the future.”

Nelson estimates that developers need about 10 million more attached homes and 30 million small homes on 4,000-square-foot lots or less to meet future home buying demand.

Joe Molinaro, who heads the smart-growth program at the National Association of REALTORS®, says consumers are showing a stronger desire for walkable neighborhoods and shorter commutes, according to consumer surveys.

Source: “U.S. Overbuilt in Big Houses, Planners Find,” The San Diego Union-Tribune (Feb. 2, 2012

Bernanke Defends Keeping Rates Low for 3 More Years

Federal Reserve Chair Ben Bernanke defended his comments about the housing market and the central bank’s decision to hold interest rates at lows until 2014 in testimony Thursday to the House Budget Committee.

Some lawmakers on Thursday questioned the Fed’s move to keep rates low for three more years, saying it brings a risk to higher inflation and stymies economic growth.

Recently, the Fed announced that it doesn’t plan to raise its benchmark interest rates from a record low until late 2014, a move that will likely keep mortgage rates at record lows as well.

Bernanke says that while the economy is showing improvement, the pace has been slow and many threats remain to economic recovery, such as European’s debt crisis, the nation’s rising debt, and the still-ailing housing market.

Bernanke said he feels the sluggish housing market is holding back overall economic growth.

National Association of Realtors® President Moe Veissi says that while the housing market has shown signs of stabilizing, lawmakers need to make housing needs more of a top priority.

“We fully support Chairman Bernanke’s comments that the lack of available and affordable mortgage financing, low home values, and high foreclosure inventories are inhibiting a meaningful housing market recovery,” Veissi said in a statement. “We believe more can be done to address the lack of available and affordable mortgage financing to creditworthy borrowers and stem the rising inventory of foreclosed homes, which is depressing home values in communities across the country. Housing and home ownership issues affect all Americans, and stabilizing the housing market is critical to the nation’s economy making a meaningful recovery.”

Source: “Bernanke Urges Caution in Overly Rapid Deficit Cutting,” Associated Press (Feb. 2, 2012) and the National Association of REALTORS®

Fannie Mae Gains More Short-Sale Authority

Five mortgage insurers have granted Fannie Mae mortgage servicers the authority to complete a short sale or deeds in lieu of foreclosure without getting their separate approval, HousingWire reports.

Traditionally, mortgage insurance groups have had to give the OK before a short sale can be processed on a property with a guaranteed loan.

Now, without that extra step, Fannie mortgage servicers may be able to speed up short sale approvals on Fannie-backed loans.

The PMI Group, which filed for bankruptcy in November, is the latest mortgage insurer this week to grant Fannie the authority to no longer wait for its approval on short sales. The other four mortgage insurers also giving Fannie the authority are: Genworth, MGIC, Republic Mortgage Insurance Co., and Radian Guaranty.

Regardless, Fannie has instructed its mortgage servicers to make sure a short sale does not conflict with any existing mortgage insurance coverage before approving it.

Source: “PMI Group Latest Mortgage Insurer to Give Fannie Mae Short-Sale Authority,” HousingWire (Feb. 2, 2012)

Mortgage Rates Hit New Lows Again

Mortgage rates once again inched lower this week, lowering the cost of borrowing and increasing housing affordability.

"Most mortgage rates eased to all-time record lows this week as fourth quarter growth in the economy fell short of market projections,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at rates for the week ending Feb. 2:

30-year fixed-rate mortgages: averaged a new record low of 3.87 percent, with an average 0.8 point, dropping from last week’s 3.98 percent average. A year ago at this time, 30-year rates averaged 4.81 percent.
15-year fixed-rate mortgages: also reached new lows this week, averaging 3.14 percent, with an average 0.8 point. Last week, 15-year rates averaged 3.24 percent and a year ago at this time 15-year rates averaged 4.08 percent.
5-year adjustable-rate mortgages: averaged 2.80 percent, with an average 0.7 point, dropping from last week’s 2.85 percent average. Last year at this time, 5-year ARMs averaged 3.69 percent.
1-year ARMs: averaged 2.76 percent this week, with an average 0.6 point, inching up slightly from last week’s 2.74 percent average. A year ago, 1-year ARMs saveraged 3.26 percent.
Source: Freddie Mac

Study Reveals Main Culprit Behind Falling Home Values

Blame it on distressed sales for falling home values, according to CoreLogic’s December Home Price Index.

Home prices nationwide dropped nearly 5 percent from 2010 to 2011, but if you exclude distressed sales, prices dropped only by 0.9 percent, according to CoreLogic.

Foreclosures continue to hamper neighboring property values.

"Until distressed sales in the market recede, we will see continued downward pressure on prices," Mark Fleming, chief economist of CoreLogic, told AOL Real Estate.

The states that saw home prices decline by the largest amounts since the housing peak are Nevada, Arizona, Florida, Michigan, and California. All five states have a high rate of foreclosures too. Nevada, which has the highest foreclosure rate in the country for the last several years, saw home values fall 60 percent since the peak.

Source: “Distressed Sales Undercut Home Prices in 2011, Study Says,” AOL Real Estate (Feb. 2, 2012)

Friday, February 3, 2012

Real Estate Professionals Feeling Brunt of Recession

The effects of the housing crisis are widespread, but nowhere do they hit home more than in the real estate community.
Eighty-eight percent of real estate professionals in a recent survey said they have lost money since 2008 or are living off significantly less income. Many are dipping into savings to make ends meet.

The survey of more than 800 real estate agents and brokers across the nation, 99 percent of whom claim real estate as their primary employment, was conducted in January by insurance company Entitle Direct.
More than half of real estate professionals – about 61 percent – said they feel the financial crisis has impacted them more than their friends and relatives who work in other industries.
“Our survey shows that both personally and professionally, they have had to make significant sacrifices to adapt to the new environment,” said Paula DeLaurentis, chief marketing officer of Entitle Direct.
With the majority of agents and brokers stating they have been “negatively impacted” by the crisis, 20 percent are working second jobs.
Nine percent have had to sell their homes, and another 9 percent lost their homes to foreclosure.
According to more than half of those surveyed, the difficult environment has made the real estate field a more competitive one; 60 percent of respondents said the field is “much more competitive.”

Rates Give Back Last Week's Increases, Setting New Record Lows

Average mortgage interest rates have reversed from the upward blip reported last week.

Declines this week completely erased the previous week’s increases, as the average rate attached to the 30-year fixed-rate mortgage, 15-year fixed-rate mortgage, and 5-year adjustable-rate mortgage all settled in at new record lows, Freddie Mac reported Thursday.
The GSE attributed the about-face to the fact that recent data on economic growth fell short of market projections.
Freddie Mac’s weekly market survey shows the 30-year fixed mortgage averaged 3.87 percent (0.8 point) for the week ending February 2. It plunged 11 basis points from 3.98 percent the week prior, which saw a 10 basis point
jump in one week’s time. Last year at this time, the 30-year rate averaged 4.81 percent.
The 15-year fixed-rate mortgage this week averaged 3.14 percent (0.8 point), down from 3.24 percent last week. A year ago, the 15-year rate was averaging 4.08 percent.
The 5-year adjustable-rate mortgage (ARM) came in at 2.80 percent (0.7 point) this week. It was 2.85 percent last week and 3.69 percent this time last year.
The 1-year ARM was the only product in Freddie Mac’s study that did not set a new low. It averaged 2.76 percent (0.6 point) this week, which represents an increase from 2.74 percent last week. At this time last year, the 1-year ARM was 3.26 percent.
Commenting on the latest survey results, Frank Nothaft, Freddie’s chief economist, noted that most mortgage rates eased to all-time record lows as fourth quarter growth in the economy came in well under market expectations.
“Gross Domestic Product rose 2.8 percent in the final three months of 2011, below the market consensus forecast of 3.0 percent, while consumer spending in December was flat,” Nothaft explained.
The one bright spot in the latest economic data, Nothaft says, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent.

States' Deadline for Decision on Robo-Signing Settlement Gets Pushed

It will be at least three more days before the industry learns how many and which states have agreed to the robo-signing settlement that was proposed last week. The deadline for state attorneys general to opt in has been pushed from February 3 to February 6.

Geoff Greenwood, spokesperson for Iowa Attorney General Tom Miller, says at least one state requested an additional business day to come to a decision, so Miller moved the cut-off date to Monday. Miller is head of the negotiating committee for the states.
While terms of the current settlement proposal have not been disclosed, it’s expected that the agreement will include penalties against the nation’s five largest mortgage servicers in the range of $25 billion and will lay out procedural changes for foreclosure processing.
Should an agreement be reached, it would absolve Ally Financial, Bank of America, Citigroup, JPMorgan Chase,
and Wells Fargo of past documentation and affidavit errors in the states that choose to join the settlement and protect them from future litigation by those states.
Oregon Attorney General John Kroger issued a statement this week announcing that Oregon will sign on to the multi-state settlement.
“I am not confident we could get a better agreement on this limited set of issues if we litigated for several more years,” Kroger said.
He also noted that the release in the settlement is “narrowly drafted,” which would leave the door open for participating states to pursue their own investigations of mortgage securitization and other practices that they feel may have led to the housing crisis.
Kroger says the proposed settlement would give the state of Oregon an estimated $30 million, in addition to an estimated $100 to $200 million to assist underwater homeowners and borrowers facing foreclosure in the state.
According to Bloomberg, Connecticut Attorney General George Jepsen also supports the settlement agreement.
The one state that may prove to be the tipping point in what has been a year of negotiations between attorneys general and servicers is California. Its attorney general has already publicly rejected the settlement proposal, stating that the deal is “inadequate for California.”
Market observers say without California, the deal may be inadequate for the servicers.

CoreLogic Records 4.7% Drop in Home Prices in 2011

Year-end data from CoreLogic shows home prices fell by 4.7 percent over 2011. It marks the fifth consecutive year the company has recorded an annual decline in residential property values.

CoreLogic performed a separate calculation, which illustrates just how big an impact distressed sales are having on home prices. The company excluded all short sale and REO transactions from 2011 and found that when the distress factor is taken out, prices declined by just 0.9 percent.
Commenting on the company’s latest results, Mark Fleming, CoreLogic’s chief economist said, “While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales
in the market recede, we will see continued downward pressure on prices.”
Montana tops CoreLogic’s list of states with the highest appreciation last year (based on overall prices, including distressed sales). There, home prices rose 4.4 percent.
Rounding out the top five list for price gains are Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent), and New York (+1.7 percent).
At the other end of the spectrum, Illinois takes the top seed for the highest level of depreciation in 2011 (also including distressed sales), with an 11.3 percent decline.
The hard-hit states of Nevada (-10.6 percent), Georgia (-8.3 percent), and Ohio (-7.7 percent) also landed on the list, with Minnesota (-7.5 percent) capturing the No. 5 spot for home price depreciation last year.
At the national level, CoreLogic says home prices ended 2011 down 33.7 percent from their peak in April 2006.
Here again, the company illustrated the weight of distressed sales, noting that when short sale and REO transactions are factored out, the home price decline from April 2006 through December 2011 narrows to 24.0 percent.
The five states with the largest declines from the peak (including distressed transactions) are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).

Thursday, February 2, 2012

FHFA Backing Away From Servicing-Fee Changes

The Federal Housing Finance Agency is pulling back from plans to revise the minimum servicing fees paid on Fannie Mae and Freddie Mac loans, and it also reportedly has abandoned a proposal to adopt a "fee for service" compensation model. The planned overhaul had generated much criticism from servicing advisory firms, particularly because no guidance was issued as to what servicers would earn on delinquent loans.

Source: "FHFA Backing Away From Radical Servicing-Fee Changes," American Banker (02/02/12)

Rural Refinance Pilot Program Announced

The USDA is launching the Single Family Housing Guaranteed Rural Refinance Pilot Program, which is designed to help rural home owners refinance their mortgages in order to reduce monthly payments.

The initiative is for borrowers who have loans made or guaranteed by USDA Rural Development and who have been able to make their payments on time for 12 months in a row. It will operate in some of the states hardest hit by the housing bust, including Florida, Illinois, Indiana, Michigan, Nevada, and Ohio.

Source: "Rural Refinance Pilot Program Announced," Farm Futures (02/02/2012)

©2012 Information, Inc.

Man Pleads Guilty to Attacking Montana Agent

A man who posed as a home buyer pleaded guilty this week to sexually assaulting a real estate agent in Great Falls, Mont.

Bradley Joseph Crisman, a 21-year-old former airman from Malmstrom Air Force Base, could face from four years to life in prison for attacking the real estate agent.

Police say Crisman pretended to be interested in purchasing a home in the area and asked the real estate agent to meet him at a house for sale in the area. Crisman admitted in court to then tying up the agent when she arrived at the home. According to police reports, Crisman allegedly put a knife up to her throat and made a threat to her life.

Crisman’s sentencing is set for April 10.

Source: “Man Pleads Guilty to Sexually Assaulting Real Estate Agent,” Great Falls Tribune (Jan. 31, 2012)

Construction Spending Rises for 5th Straight Month

The worst year for home building on record was 2011, but the year ended with a surge in construction spending, as the new-home sector heads into 2012 on a brighter note.

For the fifth straight month, builders spent more on homes and projects, the Commerce Department reported Wednesday. Construction projects increased 1.5 percent in December to a seasonally adjusted annual rate of $816.4 billion -- the highest level in nearly two years.

“The gains coincide with other signs that show the troubled housing industry may be improving,” the Associated Press reports. “Builders are more confident after seeing more interest in homes, and single-family home construction rose in the final three months of last year.”

Source: “Manufacturing Growth Fastest Since June; Construction Spending Up for Fifth Straight Month,” Associated Press (Feb. 1, 2012)

More Parents Act as Kids' Mortgage Lender

The tightened lending standards are keeping a lot of young professionals on the sidelines in home buying today. That’s where more parents are stepping in.

More parents are taking on the role as mortgage lenders to help their kids take advantage of low home prices and record-low mortgage rates. In fact, one in three first-time home buyers either received a gift or loan from their families for a home purchase made in 2011, according to National Association of REALTORS®’ research.

But parents who enter into a gift-giver or mortgage lender role need to make sure they follow some tax guidelines.

For one, the federal government has rules on how much you’re allowed to gift. For 2012, individuals can give up to $13,000 tax free in one year without having to pay gift taxes. Married couples can give up to $26,000 a year.

Some parents, instead of providing a gift, are acting more as a mortgage lender. They can set up an arrangement where they charge interest on the money they lend, but the interest charged must be based on the IRS’s “applicable federal rate” minimum for various loan maturities. Still, those rates are even far below today’s record-low mortgage rates (anywhere from 0.19 percent or even less for three-year loan terms to 2.63 percent for nine-year loan terms).

Parents will need to pay income taxes on any interest earned on the loans. Still, the return may be better than what they can get for a low-interest CD or money market fund nowadays. As for the children, they’ll still be able to deduct the interest on their taxes for the mortgage interest deduction if these agreements are formally structured.

Source: “Become Your Kid’s Mortgage Lender,” Fortune (February 2012)

Quarter of States Prove Recession-Proof ‘Pockets of Prosperity’

Not all areas were badly hit in the recession, a new study finds. In fact, nearly a quarter of states saw wages, median household incomes, and other earnings grow throughout the downturn, a study by Sentier Research finds.

The most recession-proof states tend to rely on energy and agriculture for business. On the other hand, states that tended to be the worst off during the recession also mostly had ailing real estate markets, such as Florida, California, and Arizona, where housing prices dove and hampered household incomes.

From 2005 to 2010, the median annual household income nationwide dropped 3.5 percent to $51,287 from $53,168, the study found.

But places like Washington, D.C., saw household income increase 8.1 percent during that time period to $60,000.

Median incomes in 12 of the 50 states also rose. Wyoming’s median income rose 3.6 percent, followed by North Dakota, Alaska, Louisiana, West Virginia, Oklahoma, Texas, Iowa, and Hawaii, which also all gained.

Meanwhile, the state that saw the sharpest declines during that time period was Michigan, in which median household incomes fell 9.5 percent to $47,000. Indiana, Ohio, and Minnesota also were among the states hardest hit.

Source: “Pockets of Prosperity Across USA Escaped Recession,” USA Today (Feb. 1, 2012)

New Hyde Park Strip Center Sells for $11.5M

Acadia Realty Trust acquired 1600 Marcus Ave. in New Hyde Park, NY from NHP Equities LLC for $11.25 million, or almost $319 per square foot.

The single-story, 35,271-square-foot retail center was built in 1964 in the Western Nassau County submarket.

Ken Schuckman of Schuckman Realty, Inc. represented both parties in the sale.

No More Fear and Loathing of CRE Lending for Banks

As economic headwinds subside, the commercial real estate lending business for U.S. banks has hit an inflection point. For the first time in five years, a majority of banks are finally talking about their ability to grow their loan portfolios.

While the sentiment among banks is neither unanimous, nor the projected lending growth strong, bank executives in analyst earnings calls over the past couple of weeks were clearly signaling they believe they are on the other side of writedowns and are ready to return to CRE lending.

As bankers see it, they have worked through most of the troubles tied to real estate over the last few years, and now view that segment as one that represents a great amount of potential for earning's growth.

"We're beginning to see opportunity in the marketplace in select markets, and in particular asset classes," said William H. Rogers, Jr., president and CEO SunTrust Banks Inc. "We transitioned this business back into production mode, and we believe there is good future potential here. As with our other non-housing related exposures, our commercial-oriented real estate businesses have also performed relatively well through the cycle."

The question of how much growth there is in commercial real estate is one Regions Financial Corp. executives said they revisit each month.

"Things are getting better, quite frankly, in that space [investor real estate]. But I think part of it is, perhaps the survivor bias. Those that have lasted this long are able to last a little bit longer, and they are hanging on to better days," said Barb Godin, executive vice president and chief credit officer of Regions Financial Corp. "I think, we saw the early (sell-down), and that has been a lot of what we have seen in the last couple of years, in terms of our charge-offs, or things moving to criticize classified. But again, we are seeing just an overall improvement in that sector right now."

Up until the fourth quarter of 2011, non-performing commercial mortgage and construction loans were still increasing notably. And indeed, for many banks, they are still going up, but at moderating rates. So there is still a note of caution from bankers.

"Because the financial condition of many of our borrowers has suffered over the last several years, we expect to continue to see downgrades within the portfolio into an extended recovery as a play," said Daryl D. Moore, executive vice president and chief credit officer of Old National Bancorp. "This will be especially true in the commercial real estate portfolio where capital and liquidity continued to be an issue for many of our clients."

Fed Survey Confirms Anecdotal Evidence, though Caution Remains the Watchword

Some banks are still being aggressive in charging off some loans, particularly construction loans, and are trying to sell off their foreclosed real estate inventory and nonperforming loans as best as they can.

However, in the Federal Reserve Board's latest Senior Loan Officer Opinion Survey issued this week confirmed the anecdotal evidence from the quarterly earnings calls. U.S. bank loan officers reported that demand for CRE loans had strengthened, on net, over the past three months. In addition, during the past 12 months, on net, domestic banks reportedly eased maximum CRE loan sizes and many domestic banks trimmed loan rate spreads.

Generally though, bank executives will proceed much like Claude Davis, president and CEO of First Financial Bancorp, who is tiptoeing back in to CRE lending.

"Through 2011 obviously we've all been very cautious in that sector due to some of the challenges that have been experienced," Davis said. "Where we've seen our new opportunities are really with those investors who have weathered the storm well, had the liquidity and the cash and the capacity to kind of grow and expand if you will, kind of win assets at a cheaper level. And so we've actually seen the quality be very good from our perspective in that book."

"Obviously, [we're] staying away from the high risk areas you know like residential development or some of the kind of the higher risk areas that you would expect that are more speculative," Davis added. "So we've actually seen some really nice quality credits come our way in that area in 2011."

First Financial Bancorp's commercial real estate balance increased 10.2% on an annualized basis in 2011, Davis said.

Russell Goldsmith, president and CEO of City National Corp. said, "If you looked at it year-over-year, from where we were a year ago, the pipeline looks better than it did in January of 2011. We started to do some lending in real estate a year ago. And that's kind of picked up. Mainly in finished properties and starting to look at and do a little for kind of top rate infill multifamily where things have been very strong and you are seeing some quality development."

"In terms of where our clients are in terms of rising optimism, willingness to spend, willingness to borrow, I think it's too early to declare a big trend," Goldsmith added. "But I think we are seeing some small positive signs as people. We are seeing greater appetite to invest in real estate, to do some hiring to build some inventory. But it's still I think tentative."

Philip Flynn, president and CEO of Associated Banc-Corp., said, "We continue to see opportunities for growth and expansion in CRE lending because of the retrenchment of other competitors and other sources of capital. The capital markets aren't there like they used to be for refined commercial real estate and a lot of our competitors have exited that space."

But Flynn added, "We are building a portfolio in a much more disciplined way than we did in the past. I mean, as we talked about before, one time this bank allowed real estate construction loans to grow to 11% of the total loan portfolio. You will not ever see that again here at Associated Bank."

Here's What CRE Lending Will Look Like in 2012

While it is apparent that the growth in commercial real estate lending will be limited and cautious, the timing for an improved lending environment couldn't be better for some investors who financed at the peak of the market five years ago. As mortgage production ramps up, investors will see banks being more competitive on pricing.

The bad news is that, initially, it will be the well heeled who stand to benefit first and financing terms are likely to be fairly tight. Banks will also use the opportunity to restructure the makeup of their portfolios - weeding out the less creditworthy.

"We would expect [CRE] to trough in 2012 and we have a large core group of relationships that as they become more active, or we open the spigot to allow further credit extensions, that certainly will help with amortization and other prepayments," said Donald R. Kimble, senior executive vice president and CFO of Huntington Bancshares Inc. "Frankly, that's the profitable side of the equation where we're looking to, to build it back as we deplete the non-core side of real estate. We are looking at becoming a bit more active in the REIT space as well. So, it's principally core customers, maybe a little supplementation with some REIT activity -- that would be publicly traded REITs."

"I think there is no question that the marketplace that we principally do our business in is very, very strong. And we are seeing a great deal of opportunity," said Joseph Ficalora, president and CEO of New York Community Bancorp. "We don't do every loan that we were asked to do. And sometimes, we bid on loans and we bid more conservatively than others in the marketplace and therefore we don't get every loan."

"Also the LTVs [loan-to-values] are very, very low," Ficalora said. "People are putting a lot of money into these properties. There is a lot of money from the world that's investing in real estate. So, the ability for us to do these commercial loans at low LTVs is very attractive."

Mitchell Feiger, president and CEO of MB Financial Corp., said "more remixing remains for our commercial real estate portfolio, and if this excitement grows, it will grow slowly and only because we are able to find very high and very profitable new credits."

"There are a lot of loans that were originated with 5-year terms that have not matured yet, that we may or may not want to continue to be in or maybe priced inappropriately. So it's just a continuing process, not anything different than we've done before. It's looking at each loan based on what we know now, which is influenced a lot by what we learned in the last credit cycle and decide is that the kind of business that we should invest our capital in. Our credit standards have tightened. Our return expectations are we enforce more rigorously, and so each loan that comes due or each loan that matures, we look at it and say, is this something we should do or shouldn't do."

At CVB Financial Corp., Christopher D. Myers, its president and CEO, said most of the deals his bank is doing are pricing in the 4.5% to 5.25% range -- unless the bank does an interest rate swap. Then typically the bank is pricing CRE loans somewhere around 3% on a variable rate.

"There is no question that we're having a lot of discussions with customers about refinancing their existing loans with us on the commercial real estate, we're lowering their rates," Myers said. "The good news is, is that we have prepayment penalties embedded in the vast majority of these loans, so we're able to harvest some of these prepayment penalties and use that as leverage when we do refinancing."

The retooling also extends to borrowers who still have ample time to maturity but want to refinance at today's lower rates, Myers said.

"We might have a deal where we have a commercial real estate loan that we took over and the guys having problem paying us and maybe have a maturity that goes beyond the five years expiration of the loss sharing. Well, our choices are, do we foreclose on that property? Do we work with the borrower," Myers said. "Well, if we're going to work with that borrower, we would be inclined to try to shorten that maturity to before the 5-year period of time so that at least if there was a problem going forward, we would have a matured loan prior to the five-year expiration of our loss sharing."

"If we have a problem loan that may expire in 2020 and we want to work with them, we want to give them some time to get back on track and lease the property up, or whatever the issue is. We want to make sure that we try to shorten that maturity before the 5-year expiration, so that we're at the table with them before that date determining whether we really want that loan to be on our books and we really want to extend it going forward. Hopefully then if we shorten that to, say, October 2013, we have a year to make sure that this is a loan that we want to keep, and if not, then we still have enough time to foreclosing the property if they can't pay us," Myers said.

Loan Growth Will Be Selective by Market, Asset Type

In general, bank executives said they would be targeting the strongest growth in particular assets and markets. Multifamily was most frequently mentioned as a targeted asset category as were some select middle-market industry segments such as, restaurants, health care and energy.

"Multifamily in the right location, location, location is stabilized, but everything else is still struggling to some extent and probably we'll see a bit of decline even in 2012," said John M. Killian, executive vice president and chief credit officer of Comerica Inc.

Harris H. Simmons, chairman, president and CEO of Zion Bancorporation, said the words 'major' and "growth" would not be words he'd use in the same sentence. However, he did add that "we are seeing some and anecdotal - a little bit even in single-family in top areas of Southern California, and we're seeing some apartments in Texas and in California, but there's no major rush to jump into real estate before seeing the demand side."

By market area, Bank of the Ozarks Inc.'s George Gleason, chairman and CEO, said, "I think the largest part of [our] growth is going to come from our Texas offices. The second largest part of that growth I would expect to come from our metro Little Rock, [AR], area offices and the third largest part of growth I would expect to come from our metro Charlotte [NC] office."

In the last quarter Bank of the Ozark's Texas office had accounted for 41.8% of its total loan portfolio.

"We are primarily a construction development CRE and a multifamily lender within that context and I would expect to see the vast majority of the growth occur in the construction and development commercial real estate book consistent with where it has always come from us," Gleason said.

Independent Bank Corp.'s president and CEO, Christopher Oddleifson, said he was big on his home market.

"Locally, the Massachusetts economy continues to perform better than the nation as a whole. Massachusetts employment has dropped to below 7%, its lowest level since December of '08, and the best of the Boston metro area unemployment rate has dropped to just about 6%," Oddleifson said. "The Boston area continues to see a pickup in the real estate construction projects, especially in multifamily-used properties."

And finally here's the kicker to our headline. While other banks said the desert states of Arizona and Nevada continued to be a challenge, Western Alliance Bancorporation, said for that reason, it was targeting those markets.

"We are kind of filling the void and picking up some of those relationships… rather quickly," said Robert G. Sarver, chairman and CEO of Western Alliance. "If you took a look at the competitive set of Arizona, San Diego, and Nevada banks, you would see that we really kind of stand out as pretty much the only local alternative at this point. So that's helping us get a lot of the market share."

While Nevada real estate values are still declining, Sarver said he is seeing fundamentals there getting better.

"Three months ago, they had the biggest traffic month at [Las Vegas' McCarran International Airport] in history. Convention business is up. Room rates are up 10% year-over-year," Sarver said. "So we are starting to see stabilization and a beginning of a recovery of consumer spending money, and primarily of businesses spending money."

"Arizona is probably the biggest story for us and where we have the most upside, because it's a big market," Sarver added. "It's the 16th largest state in the country at this point and growing, and its recovery is in place, and it's beginning to strengthen."

FHFA Solicits Investors for REO-to-Rental Sales

The Federal Housing Finance Agency (FHFA) on Wednesday issued a notice to investors interested in buying government-owned REOs in bulk for use as rental properties, encouraging them to register with Fannie Mae in order to pre-qualify as an eligible bidder.

FHFA says the first pilot transaction will be announced in the “near-term.” During the pilot phase, Fannie Mae will sell off pools of various types of assets, including rental properties, vacant properties, and nonperforming loans, with a focus on the hardest-hit areas.
These pilot sales represent the initial stage of the government’s Real-Estate Owned (REO) Initiative announced in August 2011, when FHFA issued a Request for Information (RFI) seeking input on options for selling single-family REO properties held by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). The agency received more than 4,000 responses from industry stakeholders.
The REO Initiative will allow qualified investors to purchase pools of foreclosed properties from government housing agencies with the requirement that the properties be rented out for a specified number of years.
“This is an important step toward increasing private investment in foreclosed properties to maximize value and
stabilize communities,” said Edward DeMarco, acting director of FHFA. “I am grateful for the collaborative effort by the many stakeholders including investors, nonprofit organizations, and state and local government officials, who have worked together on this Initiative.”
FHFA says pre-qualification of participating investors ensures they have the financial capacity and operational expertise to manage properties so that their efforts support the stabilization of communities that have been hit hard by the housing downturn.
The pre-qualification process requires those interested in receiving information regarding specific pilot transactions to meet certain minimum criteria. Beyond providing proof that they have the financial means to acquire the assets and the experience and knowledge to assume the risks associated with such an investment, FHFA says prospective investors must agree to keep certain information about the REO and related matters confidential.
The purpose of the REO Initiative pilot is to examine investor interest in various types of assets, including the location, size, and composition of pools of assets, as well as the ways in which investors maximize the participation of experienced local firms and organizations to provide the services and support needed to ensure community stabilization. The agency is also looking at which types of transactional structures and financing improve both sellers’ returns and home values in the impacted markets.
Interested investors can register to pre-qualify at FHFA’s REO Initiative page on the agency’s website.
FHFA says it is also looking at ways to improve REO sales to homeowners and small investors by enhancing the GSEs’ existing retail sales strategies. Both Fannie Mae and Freddie Mac sell the majority of their REO properties to owner-occupants at close to market value.
As of the end of the third quarter of 2011, Fannie Mae had 122,616 single-family REO properties on its books and Freddie Mac held 59,596.

Obama Details Plan for Mass Refi Program Funded by Largest Lenders

President Obama on Wednesday outlined his proposal to allow millions more homeowners to cash in on today’s historically low mortgage rates.

Speaking at a community center in Falls Church, Virginia, the president issued a call to Congress to pass legislation to establish a streamlined refinancing program through the Federal Housing Administration (FHA) that would be open to all non-GSE borrowers with non-jumbo loans who have been keeping up with their mortgage payments.
The administration estimates the program could provide as many as 3.5 million borrowers with the opportunity to reduce their mortgage debt and would cost between $5 and $10 billion.
The cost of the new refi program would not add a dime to the national deficit, Obama said, as it would be paid for by imposing fees on financial institutions with more than $50 billion in assets.
This Financial Crisis Responsibility Fee has not yet been approved by lawmakers on Capitol Hill. The president has tried to push this same big-bank-tax through the channels twice before, in early 2011 and early 2010, but was unsuccessful.
The idea met with strong opposition from lawmakers and industry trade groups, who threatened to take legal action had the Financial Crisis Responsibility Fee passed.
Under the president’s proposal, any borrower with a mortgage that is not currently guaranteed by Fannie Mae or Freddie Mac can qualify for a refinancing through FHA if they:
have been current on their payments for the past six months and have not missed more than one payment in the six months prior
have a FICO score of at least 580
have a loan that meets FHA conforming loan limits for their area
are refinancing the mortgage on their principal residence
Borrowers will apply through a streamlined process which Obama says is designed to make it simpler and less expensive for both borrowers and lenders to refinance.
Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed.
Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, lenders will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.
The president outlined additional steps to reduce program costs, including establishing loan-to-value (LTV) limits for qualifying loans. Obama says his administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify.
Obama also proposed creating a separate FHA insurance fund designated for the new streamlined refinancing program. He says this will help FHA better track and manage the risk involved and ensure the program has no
effect on the agency’s Mutual Mortgage Insurance (MMI) fund – the principal insurance account that covers default claims on all single-family and reverse mortgages.
In addition, Obama says his administration has worked with the Federal Housing Finance Agency (FHFA) to streamline Fannie and Freddie’s refinancing program for non-delinquent borrowers. With the latest expansion of the Home Affordable Refinance Program (HARP), the GSEs have eliminated LTV restrictions, lowered their refinancing fees, and reduced borrowers’ closing costs.
Obama is now calling on Congress to enact additional changes that he says will save taxpayers money by reducing the number of defaults on GSE loans.
“We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the administration is calling on Congress to do what is in the taxpayer’s interest,” according to a statement issued by the White House.
The president wants Congress to eliminate appraisal costs for all borrowers participating in HARP by directing the GSE’s to use mark-to-market accounting or another alternative to manual appraisals on loans for which the LTV cannot be determined with the GSE’s automated valuation model (AVM).
The president’s legislative plan would also require the GSEs to implement the same streamlined underwriting for new servicers as they do for current servicers under HARP, in hopes of increasing competition between banks for borrowers’ business.
A key component of President Obama’s refi plan centers on giving borrowers the opportunity to rebuild equity in their homes. All underwater homeowners who decide to participate in either HARP or the FHA refinancing program will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes by opting for a shorter loan term.
To encourage borrowers to go the rebuilding equity route, Obama is proposing the legislation provide for the GSEs and FHA to cover closing costs when the borrower agrees to refinance into a loan with a term of 20 years or less, with monthly payments roughly equal to what they’ve been paying.
Obama says this option would shave an average of $3,000 off each homeowner’s refinancing costs and would give the majority of underwater borrowers the chance to get back above water within five years or less.
The Agriculture Department, which supports mortgage financing for rural families through the USDA program, is also streamlining its process for refinancing to align with the plan outlined by Obama.
FHA is making similar changes to its existing refi program available to borrowers whose original loan is FHA-insured. To alleviate lenders’ concerns about refinancing without a full underwrite of the new loan, FHA will not include these loans in its assessments of lender performance.
Obama admitted that the administration’s past efforts to counter the effects of the housing crisis haven’t produced the results that were initially promised.
“I’ll be honest, the programs we’ve put forward didn’t work at the scale we’d hoped,” Obama told the crowd in Virginia. “Not as many people have taken advantage of it as we wanted.
“[N]o program or policy will solve all the problems in a multitrillion-dollar housing market,” Obama continued. “What this plan will do is help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or wrapped up in red tape.”
Obama closed with an appeal to Congress to act, to pass his plan, and to help more families keep their homes.

National Servicing Standards Emerge in New Homeowner Bill of Rights

“The administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards,” the White House said in a document outlining President Obama’s vision for how a servicing shop should be run.

The president on Wednesday introduced what he’s termed the Homeowner Bill of Rights – plainly defined principles that Obama says will ensure borrowers and lenders are playing by the same common-sense rules.
At the top of that list is a simple, straightforward mortgage disclosure form so borrowers have a clear understanding of their loan. Obama told constituents in Falls Church, Virginia, where he unveiled the new Bill of Rights, that the Consumer Financial Protection Bureau is already making headway in its effort to replace overlapping and complex mortgage forms with a new shorter, simpler form to be used for all home loans.
Obama’s new set of standards mandate servicers provide homeowners with full and clear disclosure of all fees and penalties upfront, with any changes disclosed before they go into effect.
It also requires servicers and investors to implement standards that minimize conflicts of interest and facilitate communication between multiple investors and junior lien holders, so that loss mitigation efforts are not hindered.
Carved out within the Homeowner Bill of Rights is a series of rules to ensure homeowners at risk of foreclosure are provided with the assistance they need to save their homes.
Obama’s proposal calls for early intervention by servicers to contact every homeowner who has demonstrated hardship or fallen behind on their payments, and provide them with a comprehensive set of options to avoid foreclosure. The president’s directive states that every distressed homeowner must be given “a reasonable time” to apply for a modification.
It also requires servicers to provide all homeowners who have requested assistance of become delinquent with access to a customer service employee who has 1) a complete record of previous communications; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.
The new servicing standards would prohibit servicers from initiating a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure.
Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless the homeowner fails to complete a mod application within a reasonable period, is denied a modification after evaluation, or fails to comply with the terms of the modification received.
The Bill of Rights also establishes protections for homeowners against wrongful foreclosures. Servicers must explain to all homeowners any decision to take action based on their failure to meet payment obligations, and provide the homeowner with the opportunity to appeal that decision in a formal review process.
In addition, prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.
“As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors,” Obama said. “A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.”
The agencies of the executive branch with authority over servicing practices – including the Federal Housing Administration, the U.S. Department of Agriculture, the Department of Veterans Affairs, and Treasury – will each begin implementing rules in the coming months that are consistent with the standards outlined by the Homeowner Bill of Rights, according to the White House.
In announcing the new set of national servicing standards, President Obama said, “Government must take responsibility for rules that are fair and fairly enforced. Banks and lenders must be held accountable for ending the practices that helped cause this crisis in the first place.”

Americans Rank Best, Worst Celebrity Neighbors

Forty-two percent of Americans say they wouldn’t want a celebrity as a neighbor, and they especially wouldn’t want to live anywhere near the cast of the reality TV show “Jersey Shore,” according to the fifth annual Zillow Celebrity Neighbor Survey for 2012.

On the other hand, 11 percent of those surveyed, said they’d most like to be neighbors with Tim Tebow, the Denver Broncos quarterback. Tebow had the highest ranking among celebrity neighbor wannabes.

Meanwhile, Angelina Jolie and Brad Pitt as well as Jennifer Aniston and Justin Theroux followed close behind for top celebrities to live near.

As for this year’s worst celebrity neighbors, Charlie Sheen, Lindsay Lohan, and Kim Kardashian came in behind the Jersey Shores cast. The Jersey Shores cast has nabbed the No. 1 spot for worst celebrity neighbors for the past two years in the survey.

The poll found a growing number of Americans saying they wouldn’t want to live near a celebrity, up from 27 percent compared to last year’s survey.

"As a voyeuristic culture that breathlessly tracks every celebrity movement, it's extremely surprising to see so many Americans saying they wouldn't like to live next to any celebrity at all,” Amy Bohutinsky, Zillow’s chief marketing officer, said in a statement. “In fact, more people opted out of a celebrity neighbor in 2012 than in any of the past years we've run this poll. We may want to watch, read and talk about celebrities, but when it comes to sharing a back fence, many Americans think it's just too close for comfort."

Source: Zillow

Where List Prices Have Fallen the Most in a Year

While nationally, the median list price has been on the rise the last year, increasing 5 percent year-over-year to $188,000, according to December 2011 housing data published by

But home prices the past year haven’t been rising everywhere. For example, Detroit continues to face a plague of foreclosures that are bringing home values down in the area. The metro area had the biggest drop in median list prices the past year.

The following are the cities with the biggest drops in median list prices year-over-year, based on December 2011 housing data of 146 metro markets tracked by

1. Detroit: -11.01%
Median list price: $80,000

2. Chicago: -10%
Median list price: $189,000

3. Las Vegas: -7.62%
Median list price: $120,000

4. Sacramento, Calif.: -6.98%
Median list price: $199,900

5. Los Angeles-Long Beach, Calif.: -6.37%
Median list price: $324,900

6. Atlanta, Ga.: -6.25%
Median list price: $150,000

7. Orange County, Calif.: -5.53%
Median list price: $425,000

8. San Francisco, Calif.: -4.92%
Median list price: $599,000

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Settlement Over Mortgage Abuses May Come This Week

States have until the end of this week to decide whether they will agree to sign onto a settlement over mortgage abuses with the nation’s largest banks, Reuters News reports.

State and federal officials have been in settlement talks for more than a year but have been unable to reach an agreement.

The proposed deal would include mortgage principal write-downs for distressed home owners. Banks would also pay up to $25 billion. In return, state and federal officials would release banks from facing civil claims from any errors in servicing and originating loans, Reuters reports.

The banks involved in settlement negotiations are Bank of America, Wells Fargo & Co., JPMorgan Chase & Co., Citigroup, and Ally Financial Inc.

Some states have been reluctant to sign onto the deal, criticizing the settlement as being too lenient on banks.

Reuters News says that states have one week to make a decision about whether to sign on with the settlement. An announcement is expected next week.

Source: “States to Decide This Week on Mortgage Deal,” Reuters (Jan. 30, 2012)

Investors Jump in to Turn Foreclosures into Rentals

The government and private equity firms are gearing up to start marketing foreclosed homes as rentals in an effort to help lessen the downward impact foreclosures have on the price of nearby homes.

The Federal Housing Finance Agency plans to offer some of its 180,000 foreclosed homes through Fannie Mae and Freddie Mac to private operators who will turn them into rental properties, Bloomberg News reports.

The Federal Housing Administration also plans to participate in a rental program. In a November memo, it has suggested that its program work with public-private partnerships to share the risk and profits, as well as explore offering rent-to-own opportunities to tenants of the homes.

Private equity firms are stepping up to acquire some single-family homes to manage as rentals. GTIS Partners has already earmarked $1 billion by 2016 to acquire single-family homes to manage as rentals. GI Partners also says it will invest $1 billion on rental housing.

“We’re starting to see this as a billion-dollar opportunity to buy rental housing,” Thomas Shapiro, the founder of the GTIS Partners fund, told Bloomberg News.

A few months ago, the White House solicited ideas from the public on how to work a foreclosure rental program to get a better grip on the government’s foreclosure inventory. The White house says it hopes that by turning some of the foreclosures that have dogged many markets into rentals, it will be able to ward off any further drops to overall home prices.

Source: “Foreclosures Draw Private Equity as U.S. Sells Homes,” Bloomberg (Jan. 31, 2012)

Home Ownership Rate Drops to 1997-Levels

The home ownership rate took another dip in the fourth quarter of 2011, falling for the seventh year in a row as fewer Americans own their homes.

The home ownership rate now stands at 66 percent, a level that hasn’t been reached since 1997, the U.S. Census Bureau reported this week. The home ownership rate peaked at 69.2 percent in the fourth quarter of 2004, and has gradually fallen ever since.

The home ownership rate has fallen the most in the West, standing at 60 percent — a big drop compared to 64.5 percent in the fourth quarter of 2006, the Census reports.

Some people who want to own a home are being shut out of the market because they’re unable to qualify for financing for a mortgage, Paul Dales, an economist with Capital Economics, told the USA Today. Stringent loan standards have been blamed on holding back a housing recovery.

As such, more people are turning to renting. Nearly 34 percent of occupied homes in the fourth quarter were rentals, Census data shows.

"The share of Americans who are willing and able to own their own home is still falling," analysts at Capital Economics told HousingWire. "The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords’ returns, higher.”

Source: “Home Ownership Rate Falls to 14-Year Low,” HousingWire (Jan. 31, 2012) and “Home Ownership Rate Falls to 66% as Downturn Nears a Bottom,” USA Today (Jan. 31, 2012)

Obama Refi Plan Would Help Non-GSE-Backed Borrowers

In the details released today, President Barack Obama fleshed out a proposal he announced in his State of the Union speech to boost the housing market by helping more underwater home owners than are currently being served by lenders.

The President said he wants to make the federal government's existing mortgage refinance program, called HARP (Home Affordable Refinance Program) available to more home owners. It's currently available to struggling borrowers with loans backed by Fannie Mae and Freddie Mac. For these borrowers, incentives are provided under certain conditions to make refinancing more attractive.

Under the new proposal, HARP would be expanded to include borrowers with loans that aren't backed by Fannie and Freddie. These are the borrowers whose loans were securitized in private-label securities without any federal backing, and they would be allowed to refinance into FHA-backed loans, the same as the Fannie and Freddie borrowers. The administration has estimated that borrowers would save $3,000 a year in mortgage costs.

To be eligible, borrowers would have to have made their mortgage payments over the last six months with only one delinquency, and their loan amount couldn't exceed the FHA loan limit for their area. If borrowers owe more than 140 percent of the value of their home, the lender has to agree to reduce the loan balance. Also, borrowers wouldn't have to submit a full file of paperwork for the refinancing as long as they can verify their employment. The proposal also would enable borrowers who still have equity in their home — up to 20 percent — to participate.

The changes will require legislation, so Congress will have to agree to them for the expanded program to take effect.

In his State of the Union speech last week, Obama said he would pay for the expanded program using a fee charged to the country's largest banks so the initiative wouldn't add to the deficit. But some members of Congress have said they oppose charging banks a fee to cover the cost.

The Obama plan would also introduce a Bill of Rights for home owners, part of which is intended to smooth the mortgage modification and foreclosure processes, which today can be contentious and difficult for borrowers to understand. A key part of this is an effort to curb banks' practice of undertaking a mortgage modification while at the same time proceeding with a foreclosure — a process called dual tracking. Before they can start foreclosure, banks will have to show they took all reasonable steps to modify a borrower's mortgage.

To help ease inventories of foreclosed homes, the plan would give a green light to Fannie Mae to implement a pilot program to make foreclosures available to investors in bulk purchases for conversion to rental housing. Under the pilot, Fannie would package for sale foreclosed homes in a limited number of markets and require them to be used as rental properties for a period of time.

NAR has concerns with this proposal and has been talking with federal regulators to ensure that the program is carefully tailored to the communities who can truly benefit from it, that small- and medium-sized investors be able to participate, and that real estate professionals continue to play a role in the disposition of the homes.

In a statement released after the President outlined the details of his proposal, NAR said it’s urging the regulator of Fannie and Freddie, the Federal Housing Finance Agency, “to proceed cautiously with the REO-to-rental program since housing markets are complex and varied.

“NAR believes an overly aggressive REO-to-rental program that is not privately administered by local entities and does not involve substantial participation of local market experts, especially licensed real estate professionals, could be disruptive and counterproductive to communities already suffering from high foreclosure inventories and lower housing values.”

By Robert Freedman, REALTOR® Magazine

Appraisal Institute Offers Guidance on Distressed Comparables

The Appraisal Institute recently released guidelines to instruct its members on how to deal with distressed sales and foreclosures when seeking comparables.

According to the Institute, some homeowners claim appraisers have undervalued their homes by relying on nearby foreclosed homes and distressed sales as comparables to their properties.
In a recent announcement about the new guidance, the Appraisal Institute states that qualified appraisers “know what adjustments to make, if any, when using distressed sales as comparables, for such methods are taught in basic coursework and updated seminar materials available to professional appraisers.”
Regardless, because the issue is “particularly crucial” in the current market where distressed sales are common, the Institute is offering additional guidance.
The new guide instructs appraisers to rely on less recent sales and broaden their geographic parameters when they cannot find an appropriate comparable within the traditional boundaries.
In general, “foreclosures and short sales usually do not meet the conditions outlined in the definition of market value,” the Institute says.
Short sales may involve “atypical seller motivations,” and foreclosed properties may be damaged or deteriorating. However, “appraisers cannot categorically discount foreclosures and short sales as potential comps in the sales comparison approach,” the institute states.
“As is always the case in selecting sales to use as comparables, appraisers must investigate the circumstances of each transaction, including whether atypical motivations were involved, sales concessions were involved, the property was exposed on the market for a typical amount of time, the marketing program was typical, or the property condition was compromised,” the guidelines state.
When using distressed sales as comps, appraisers must assess all aspects of the sale and decide whether it is appropriate to make an adjustment due to uncommon conditions.

Refi Claims Against Freddie Mac Expose GSEs' Public-Private Conflict

Was the nation’s second largest mortgage company betting against mortgage refinancing? Allegations supporting the affirmative which were made public this week have prompted the U.S. Treasury to launch an official probe.

An investigative story published jointly by Pro Publica and NPR suggests Freddie Mac instituted restrictions on refinancing which were intended to prevent homeowners from taking advantage of lower mortgage rates in order to reap greater profits from investments that banked on high-rate loans.
The two nonprofit media outlets say public documents reveal that in 2010 and 2011, Freddie Mac began purchasing “inverse floaters,” financing instruments structured as collateralized mortgage obligations (CMOs) that pay out based on the difference between the rate being paid by the borrower and a global benchmark rate, which has fallen to extremely low levels.
With most of the loans packaged into these deals carrying interest rates ranging from 6.5 to 7 percent, Pro Publica and NPR assert Freddie’s investment earnings would take a hit should the borrower refinance at today’s lower rates. The publications accuse the GSE of raising and instituting new fees for refinancing over the past two years to deter borrowers, at a time when the company was told its duty was to foster a housing recovery by assisting distressed homeowners.
Celia Chen, a senior director at Moody’s Analytics, says the “revelations actually come as little surprise, but they do highlight the ambiguous status of Freddie and its sister agency, Fannie Mae.”
The GSEs’ main business is guaranteeing mortgage credit risk, which ensures money is available for mortgage refinancing, Chen explained. But the companies need profits to stay in this business, as well as to minimize the cost to taxpayers, she says. To earn money Fannie and Freddie trade in residential mortgage-backed securities [RMBS] – and herein lies the conflict, according to Chen.
“When homeowners refinance, RMBS returns go down,” Chen explained. “Thus the credit-risk side of the company could potentially help keep profits up by making refinancing harder. This looks bad at a time when millions of households are struggling and mortgage rates are at record low levels; and worse given that policymakers are encouraging refinancing as a way of shoring up the housing market.”
Chen says the story is less sensational than it appears — Freddie’s potential conflict has long been recognized, and the agency operates its guarantee and investment businesses independently of each other.
“Yet the issue does highlight a broader problem with both Freddie’s and Fannie’s current status: Neither fully public nor fully private, they serve neither interest well,” according to Chen.
She suggests a remedy is for the GSEs’ investment arms to be spun off from the rest of the company. “Congress needs to chart a course for the agencies’ future, and the sooner the better,” Chen said.
At a White House press briefing following Pro Publica’s publication and NPR’s broadcast of the story, spokesman Jay Carney told reporters that the Treasury Department is looking into the allegations.
Freddie Mac’s regulator, the Federal Housing Finance Agency (FHFA) issued a statement saying the GSE ceased retaining inverse floaters in 2011. The agency says of Freddie’s $650 billion retained portfolio, only $5 billion is currently held as inverse floaters.
FHFA says both Fannie and Freddie were instructed not to consider changes in their own investment income as part of the evaluation process for the Home Affordable Refinance Program (HARP).
“FHFA and the Enterprises remain fully committed to the success of HARP as it is a valuable tool to lessen the Enterprises’ credit risk and provide assistance to borrowers seeking to refinance,” the regulator said. “Now that the HARP changes are in place, the refinance process is between borrowers and loan originators/servicers, not Freddie Mac.”
Freddie says it “is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates.” The company points out that 78 percent of its loan purchases last year were refinancings.
The GSEs’ latest report to Congress shows that from March 2009 to September 2011, Fannie and Freddie refinanced nearly 928,600 loans through the HARP program. The two companies’ total refinances over that period tally 9,010,227, of which Freddie Mac lays claim to 3,629,438.

Robo-Signing Settlement Update: Friday is Cutoff for States to Join

State attorneys general have until Friday to sign on to the settlement draft proposed last Monday that would resolve claims against the nation’s top five mortgage servicers surrounding documentation errors in foreclosure processing, according to the Wall Street Journal’s Ruth Simon.

Based on a document obtained by the Journal, Simon says the deadline has been set by lead negotiators who are trying to pull together an agreement between states, the U.S. Department of Justice, HUD, Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.
The year-long back-and-forth between states’ lead counsels and the nation’s largest mortgage servicers may be in its final days … possibly.
Two state attorneys general have already rejected the settlement proposed. Delaware Attorney General Beau Biden and California Attorney General Kamala Harris have both voiced their opposition to the agreement as it stands.
Ian McConnel, director of the fraud division for the Delaware attorney general, says Biden’s opposition to the settlement “should come as no surprise” given his prior public comments on the issue.
“We’ve reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California,” Shum Preston, spokesperson for the California Justice Department told
“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability. At this point, this deal does not suffice for California,” Preston said.
“With about one out of every five of the nation’s foreclosures being in California, the value of any settlement without the inclusion of the Golden State may not be of interest to the banks,” according to James Frischling, president and co-founder of NewOak Capital, an advisory, asset management, and capital markets firm.
Frischling says without a release from California, “[t]he liabilities they [the servicers] face would still be massive, so California is the 800 pound gorilla in the room that must be part of any settlement.”
The settlement terms could include as much as $25 billion in penalties assessed against the servicers, which would be used to fund principal writedowns and mortgage modifications and be used to compensate borrowers impacted by servicer errors.
It’s been reported that smaller servicers may also join the settlement, which would release them from future litigation by the state and federal officials involved on matters related to past documentation and affidavit issues.
The Washington Post reports North Carolina Bank Commissioner Joseph Smith has been tapped to ensure that the terms of the settlement are carried out. Smith was President Obama’s pick to lead the Federal Housing Finance Agency (FHFA) back in November 2010, but his nomination failed to win approval in the Senate.

Homeownership and Vacancy Rates Drop

The national vacancy rate among single-family non-rental homes fell to 2.3 percent in the fourth quarter of 2011, according to data released Tuesday by the U.S. Census Bureau.

That’s down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006.
Undoubtedly, the decline in vacancies is an offshoot of fewer foreclosures in 2011 combined with a slight uptick in home sales for the year.
RealtyTrac reports foreclosure starts were down 39 percent from 2010. And while new home sales had their worst showing in recorded history, the National Association of Realtors tracked a 1.7 percent annual increase in existing-home sales.
Paul Diggle, property economist with Capital Economics, says it’s another sign that excess inventory – at least the visible inventory – is slowly but surely being cleared. It
“leaves the visible inventory at a level consistent with house prices bottoming out later in the year,” according to Diggle.
The Census Bureau also reported that the nation’s homeownership rate dropped to 66.0 percent – its lowest level in nearly 14 years – as the housing downturn has eaten away at the share of Americans who are willing and able to own their own home.
The fourth-quarter homeownership rate gave up almost all of the previous quarter’s gain, Diggle noted.
“What’s more, despite median mortgage costs being more affordable than ever and early signs that mortgage credit is becoming more available…the seven-year downturn in homeownership may still have further to run,” he warns.
The flipside, Diggles says, is there are more households in the rented sector and fewer properties lacking tenants, which is helping to drive rents, and therefore landlords’ returns, higher.
He expects rental value growth is to hit 3 percent this year and average rental yields to rise to around 5.5 percent.
With house prices still falling for now, Diggles says it will be a while yet before homeownership is once again seen as an essential part of the American Dream, and that’s despite the fact that owning now seems to make greater financial sense than renting.
The drop in the homeownership rate pushed the share of households in rented accommodations up, from 33.6 percent at the beginning of 2011 to 34.0 percent in the fourth quarter. The ratio of homes in the rental sector that were vacant also fell, to 9.4 percent

Cutoff Looms on Loan Accord

Federal and state officials negotiating with major banks on a settlement over allegedly improper foreclosures have given state attorneys general until Feb. 3 to opt in to a potential deal. The number of states participating could affect the value of the deal or whether an accord is even reached.

Government officials are seeking a deal valued at $25 billion in loan write-downs and other homeowner compensation with Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo.

Source: "Cutoff Looms on Loan Accord," The Wall Street Journal (Jan. 31, 2012)

Living Small Offers Growing Appeal

Do-it-yourself tiny homes is a growing niche among some who desire eco-friendly lifestyles, The Wall Street Journal reports.

A series of new books are coming out next month that show aspiring home owners how they can build their own small home.

“The appeal is that secretly most people would like to be in the country building their own little house," says Jonas Kyle, an owner of Spoonbill & Sugargtown Bestsellers in Brooklyn, N.Y., which publishes the “Tiny Homes: Simple Shelter” by Lloyd Kahn. “There's a builder lurking inside everyone."

"The economy declined, and people are finding ways to downsize," says Patricia Bostelman, vice president of marketing at Barnes & Noble Inc., about the the series of new books about living small and simply being released.

Source: “Tiny Homes Carve a Niche,” The Wall Street Journal (Jan. 30, 2012)

4 Questions to Ask Before Buying a Foreclosure

Foreclosures can offer big bargains, but buyers need to be careful that they don’t get over their heads in purchasing a home that may need more repairs than they bargained for.

Foreclosures are usually sold as-is, and homes that are left vacant standing too long can have a lot of maintenance problems.

Real estate experts suggest buyers consider the following questions:

1. How long has the home been vacant? Be cautious of a foreclosed home that has stood vacant for more than a few weeks or had its utilities shut off a long time. Marvin Goldstein, a home inspector for many foreclosed properties, says a home can deteriorate quickly when heating, cooling, electricity, and running water have been turned off for awhile.

2. How old is the home? Goldstein says that homes that are more than 50 years old may have a failing plumbing system or inadequate electrical wiring.

3. How does the home look? Are there broken windows, gutters hanging down, or damaged siding? “Trust your instincts. If the house looks bad from the outside, it's probably worse than you think,” Goldstein told The Oklahoman.

4. Is there anything missing? Sometimes former owners remove anything of value from the home, such as built-in light fixtures, bathroom tile, water heaters, air-conditioning units, and hardwoods, says Bill Jacques, president-elect of the American Society of Home Inspectors.

Housing experts encourage buyers to get a home inspector to look at the property, even if it is sold as-is, so that home buyers know any repairs needed and cost estimates before they purchase the home.

“Buying a bank-owned home gives you the opportunity to enter the market at a very low price level,” says Dorcas Helfant, a past president of the National Association of REALTORS®. “You can find terrific values among foreclosures, especially if they're not in too bad shape. But, remember, these houses are discounted for a reason.”

Source: “Foreclosed Homes May Need Extensive Repairs,” The Oklahoman (Jan. 28, 2012)

Treasury Investigates a Bet Against Home Owners

The Treasury Department is investigating allegations against Freddie Mac that accuse the government-sponsored enterprise of “betting against home owners’ ability to refinance their loans” while also putting in roadblocks to make it more difficult refinance at today’s lower rates, White House spokesman Jay Carney said Monday.

Some argue the GSE imposed several barriers to home owners who wanted to refinance their mortgages, like adding risk-based fees.

The White House says it has tried to get the GSEs to ease such refinancing restrictions, as well as participate in debt-forgiveness programs, so more home owners can take advantage of current low mortgage rates.

The Treasury Department announced last week that it would extend for the first time to Freddie Mac and Fannie Mae-backed loans incentives for lenders to forgive portions of homeowner debt in a refinancing program.

But both GSEs have traditionally refused to permit debt reduction on its loans because it says it will create more losses to taxpayers. (The GSEs are backed by taxpayer money.) The GSEs did agree to review the current incentives, however.

Several media outlets are reporting that Freddie Mac had a multibillion-dollar investment that hinged on borrowers continuing to pay higher interest rates, and they’re alleging that’s why the GSE wasn’t so eager to help more home owners refinance.

“Beginning in 2010, Freddie bought several billion dollars' worth of ‘inverse floater’ securities — essentially the interest-paying portion of a bundle of mortgages — for its investment portfolio while selling the far less risky principal portion,” an article in The New York Times reports. “There is no evidence that Freddie tailored its refinancing standards to its investing strategy, but ‘inverse floaters’ make less money if the loans they cover refinance to a lower interest rate.”

Freddie denies any wrongdoing and, in a company statement said that it has stopped doing such transactions and only $5 billion of its $650 billion portfolio contained inverse floaters. In a statement issued Monday, the company said ''Freddie Mac is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates.” What’s more, the company says that refinancings made up 78 percent of its loan purchases last year.

Source: “Treasury Investigates Freddie Mac Investment,” The New York Times (Jan. 31, 2012) and “Is Freddie Mac Betting Against Home Owners?” ABC News (Jan. 30, 2012)

5 Housing Markets Expected to Outshine All the Rest

Inman News released a report highlighting metro areas that are expected to “outshine many other markets in real estate performance this year.”

In its report, Inman News scanned metro areas with populations over 150,000 to find where real estate sales volume is rising, job markets are growing, foreclosure activity is low, sales prices are appreciating, and home affordability is at high levels.

Here are the metro areas topping the list, including the third quarter 2011 median sales price and the percentage change in sales price year-over-year.

1. Raleigh-Cary, N.C.

Median sales price: $224,300

Median sales price change year-over-year: 7.3 percent

2. Wichita, Kan.

Median sales price: $120,900

Median sales price change year-over-year: 5.5 percent

3. Rochester, N.Y.

Median sales price: $123,400

Median sales price change year-over-year: 1.4 percent

4. Des Moines-West Des Moines, Iowa

Median sales price: $157,900

Median sales price change year-over-year: 0.8 percent

5. Chattanooga, Tenn.-Ga.

Median sales price: $128,700

Median sales price change year-over-year: 7.3 percent

Find out the other cities that made the top 10 list as well as more about each metro area’s real estate market and why it’s one to watch in the new year.

Source: “10 Real Estate Markets to Watch in 2012,” Inman News (January 2012)

Case-Shiller Records Continuing Declines in Home Prices

Data released Tuesday morning by Standard & Poor’s for its S&P/Case-Shiller home price index showed declines in November of 3.6 percent for the 10-city composite and 3.7 percent for the 20-city composite when compared to price levels from a year earlier.

Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent, holding constant with the annual declines reported for October of -3.2 percent for the 10-city composite and -3.4 percent for the 20-city measurement.
Eighteen cities’ annual returns were in negative territory in November. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent, Atlanta continued to post the lowest annual results.
In addition to both composites, 13 of the 20 metros included in S&P’s study saw their annual returns worsen compared to October’s data. New York and Tampa saw no change in annual returns in November, while Charlotte, Cleveland, Denver, Minneapolis, and Phoenix saw their annual rates improve.
“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” said David Blitzer, chairman of the index committee for S&P. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.”
Both the 10- and 20-city composites of the closely watched index posted declines of 1.3 percent between October and November. Among the 20 cities tracked, 19 saw average home prices slip month-over-month. The only positive was Phoenix, where prices rose 0.6 percent from October to November.
Stiff says in the monthly data too, Atlanta stands out in terms of relative weakness. Home prices there were down 2.5 percent over the month of November, after having fallen by 5.0 percent in October.
Atlanta, along with Las Vegas, Seattle, and Tampa all reached new cycle lows in November, according to Stiff.
The 10-city and 20-city composite readings are holding above their cycle lows hit last spring by +1.0 percent and +0.6 percent, respectively.
Measured from their June/July 2006 peaks through November 2011, the decline for both the 10-city composite and 20-city composite is -32.9 percent.
As of November 2011, S&P says, average home prices across the United States are back to the levels they were at in mid-2003.
For the hard-hit metros of Atlanta, Cleveland, Detroit, and Las Vegas, average home prices are below their January 2000 levels.

Wells Fargo Aims to 'Lift' Neighborhoods in Los Angeles, Atlanta

Wells Fargo announced the launch of a new program, Neighborhood LIFT, which aims to bring reluctant buyers off the sidelines to help absorb excess inventory in two major cities.

The bank established a goal of lending $10.5 billion to Los Angeles homebuyers and $1.3 billion to Atlanta buyers.
In addition, Wells Fargo designated $15 million to assisting homeowners with down payments in Los Angeles and $8 million in Atlanta.
The program starts in early February with two-day events that will bring important resources and information to prospective homebuyers.
Attendees will learn about down payment assistance and financing for homes and renovation projects.
The Los Angeles event will take place February 3rd and 4th, and the Atlanta event will take place February 10th and 11th.
Interested residents can register at
Wells Fargo chose to launch Neighborhood LIFT in Los Angeles and Atlanta because the two cities have been particularly hard-hit by the housing crisis, and both have high inventories of bank-owned properties.

Homeowner Satisfaction Rate at 72%, Highest for Short Sale Purchasers

Seventy-two percent of homeowners say they are satisfied with homeownership, according to a recent survey of more than 1,400 homeowners conducted by HomeGain, a provider of online marketing programs that connect agents and brokers with home buyers and sellers.

Among the 28 percent who said they were dissatisfied, 63 percent cited price depreciation as the main reason for their dissatisfaction.
Other dissatisfied homeowners cited the costs of owning and maintaining a home as major reasons for their dissatisfaction.
HomeGain also assessed satisfaction levels by sales type and found that homeowners who purchased a home through a short sale were the most likely to be pleased with their choice.
Eighty-three percent of short sale purchasers were satisfied homeowners.
Homeowners who purchased foreclosed homes were the group next likely to be satisfied with owning a home. The group reported a 79 percent satisfaction rate.
Existing-home and new home purchasers were least likely to be satisfied, though a majority of these homeowners
were still satisfied. Seventy-one percent of existing home purchasers and 73 percent of new home purchasers said they were satisfied.
Homeownership satisfaction varied somewhat by region with the highest satisfaction rates in the Northeast – 77 percent – and the lowest in the Midwest – 68 percent.
The Southeast and West fell in between at 73 percent and 71 percent, respectively.
When comparing satisfaction among homeowners of different age groups, HomeGain found that satisfaction was greatest among older homeowners and least prevalent among the youngest homeowners.
Homeowners ages 18 to 25 were the only homeowner to report more than a 50 percent dissatisfaction rate.
Fifty-five percent of homeowners ages 18 to 25 were dissatisfied with homeownership, while 24 percent of those 55 and older expressed dissatisfaction with being a homeowner.
The survey also found that home value was inversely related to homeownership satisfaction. Those whose homes are valued at less than $75,000 are 77 percent likely to be satisfied homeowners.
The rate trends steadily down as prices rise, with the highest category in the survey – homes valued at more than $801,000 – bringing in the lowest satisfaction rate – 69 percent.
Sixty-seven percent of dissatisfied homeowners with homes valued more than $801,000 cited price depreciation as a primary source of their discontent.
For those with homes valued less than $75,000, price appreciation was not a major factor in their outlook. Fewer than 40 percent of these homeowners cited price appreciation or depreciation as the primary reason for their position on homeownership.

Don't Expect Rise in National Home Prices Until 2013: Fiserv

The analysts at Wisonsin-based Fiserv, Inc. are forecasting average U.S. home prices to fall by another 2.7 percent through the third quarter of 2012, before rising 3.8 percent by the third quarter of 2013.

The company says the monthly mortgage payment for the median-priced U.S. home has dropped to $640, nearly 45 percent below the housing bubble peak of $1,150 and its lowest level since 1994. Mortgage payments now account for only 14 percent of monthly median family income, according to David Stiff, Fiserv’s chief economist.
This improvement in housing affordability is expected to drive sales activity going forward, and while not enough to change Fiserv’s predictions for the direction of home prices at the national level, the company does foresee notable improvements in select markets.
Stiff notes that while prices continued to fall in most markets, sales activity picked up at the end of 2011, setting the foundation for price stabilization in 2012.
Stiff also cited the impact of improving economic indicators, such as consumer confidence, which while still extremely low, has bounced back from its sharp decline following the downgrade of U.S. debt.
He stressed that if the job market continues to improve, then the rebound in consumer confidence will be sustained this year and more households will be willing to purchase big ticket items such as a house.
“[W]e do anticipate that increasing sales activity will begin to drive small increases in prices in as many as half of U.S. metro areas,” Stiff said.
He says some larger metros that escaped the worst of the home price bubble, such as Houston and Fort Worth, Texas, as well as Salt Lake City, Utah, can expect increases of 1 to 3 percent in the coming year. Many smaller metro areas, such as Boise, Idaho, and Albuquerque, New Mexico, are forecast to see increases of 4 to 6 percent.
In addition, between Q3 2011 and Q3 2012, prices are projected to rise by at least 5 percent in seven metro areas: Gainesville, Georgia; Sumter, South Carolina; Lake Havasu City-Kingman, Arizona; Pueblo, Colorado; Coeur d’Alene, Idaho; Bremerton-Silverdale, Washington; and Madera, California.
The latest home price data from Fiserv shows that the average price of a U.S. single-family home fell to a new post-bubble low in the third quarter of 2011, declining 3.9 percent compared to the year-ago period.
The company reports that current average home prices are now 33 percent below the 2006 peak. Over the past year, home prices fell in 337 of the 384 metro areas tracked by Fiserv’s Case-Shiller index.
Despite continued price erosion, Fiserv says some metro areas saw significant home price gains in the past year including markets that were deeply affected by the housing bubble and recession. Examples include Detroit, Michigan (11.1 percent), Buffalo, New York (6.7 percent), and Fort Myers, Florida (2.8 percent).
California and Florida, two of the states hit hardest by the housing market bubble, account for 10 of the 20 metro areas forecast by Fiserv to see the greatest increase in home prices through 2016.

Housing Will Soon Help the Economy, but Not by Much: Report

The analysts at Capital Economics are holding fast to their forecast that the downturn in the housing market is drawing to a close.

As a result, they say housing should soon start to boost economic growth, but as housing now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2 percentage points to annual gross domestic product (GDP) growth this year and another 0.2 percentage points next year.
Based on figures from the U.S. Department of Commerce, in the fourth quarter of last year, residential investment accounted for just 2.5 percent of overall GDP. That’s down from the 2005 peak of 6.3 percent and the 1946 to 2008 average of 4.8 percent.
“[A]lthough housing may soon support growth, it won’t help much,” Paul Dales, senior U.S. economist with the international research firm, said in a report released Monday.
If housing had performed as well during this economic recovery as during past ones, then in each of the last two years annual GDP growth would have been roughly 1 percent higher, Dales explained.
“The housing market therefore has the potential to turn the current lackluster economic recovery into something much more vigorous,” according to Dales.
The Commerce Department reported Friday that during 2011 (measured from the fourth quarter of 2010 to the fourth quarter of 2011), real GDP increased 1.6 percent. Real GDP increased 3.1 percent during 2010. The 2011 figure is a preliminary estimate by the federal agency, which plans to issue revised updates to its GDP assessment at least twice over the next several months.
Although housing demand will rise over the next few years, it will remain unusually low, according to Capital Economics. The company says with weak job growth and tight credit conditions likely to continue to restrain first-time buyers, low household formation will keep total housing demand below the normal rate of 1.6 million additional homes a year until 2014.
“It is quite clear that the housing recovery we expect will not be strong enough to trigger a significantly stronger recovery in the wider economy,” Dales said.

Monday, January 30, 2012

Top 6 States With Highest Mortgage Debt

A high mortgage debt doesn’t mean you’re at a greater likelihood of defaulting on your mortgage, at least according to a new analysis.

The states with the highest mortgage debt are surprisingly in states with some of the lowest foreclosure rates in the country, according to an analysis by 24/7 Wall St., using a report by Credit Karma. Residents of the states with some of the highest mortgage debt seem to be wealthy enough to be able to afford to lose or owe more money than other states, finds 24/7 Wall St.

The states with the highest mortgage debt tend to be in states that have some of the highest median home values.

The following are the top states with highest mortgage debt, according to 24/7 Wall St. and Credit Karma:

1. California
Average mortgage debt: $313,749
Median household income: $57,708

2. Hawaii
Average mortgage debt: $307,508
Median household income: $63,030

3. Maryland
Average mortgage debt: $242,445
Median household income: $68,854

4. New Jersey
Average mortgage debt: $236,017
Median household income: $67,681

5. Washington
Average mortgage debt: $225,581
Median household income: $55,681

6. Massachusetts
Average mortgage debt: $224,661
Median household income: $62,072

Source: “States Where Citizens Carry the Most Mortgage Debt,” 24/7 Wall St. (Jan. 30, 2012)

Appraisers Seek Comments on Seller Concessions

The Appraisal Foundation's Appraisal Practices Board is seeking public comment on a proposal about how to adjust comparable sales for seller concessions when making valuations.

“A common tool used to help facilitate a property transaction is to have the seller provide financial assistance or incentives to the buyer,” the board’s proposal states. “Such assistance may be considered a seller concession or financing concession and this is important because it may have an influence on the contract price. The purpose of this guidance is how to identify, verify, analyze and adjust sale comparables for both seller and financing concessions.”

You can view the appraisal board’s second draft at the Appraisal Foundation Web site, and submit public comment on the draft proposal through Feb. 29.

After the board collects feedback, it will vote on whether to adopt the proposal as official guidance from The Appraisal Foundation board, which was formed to issue guidance on recognized valuation methods among appraisers.

The board also said it will be developing guidance on other appraisal topics that will likely be coming up soon for public comment as well, although it was vague on what those other topics will pertain to about with the appraisal process.

Source: REALTOR® Magazine Daily News

10 Cities With the Cheapest Housing

Nationally, the median list price for a home in December 2011 was $188,000, a 5 percent increase over December of 2010, according to data tracking 147 metro areas.

But in some markets, you can snag homes for under $100,000.

The following cities have some of the cheapest housing based on December 2011 median list prices.

Detroit, Mich.: $80,000
South Bend, Ind.: $99,700
Toledo, Ohio: $104,900
Dayton-Springfield, Ohio: $105,900
Fort Wayne, Ind.: $107,000
Las Vegas: $120,000
Springfield, Ill.: $122,700
Lakeland-Winter Haven, Fla.: $128,000
Cleveland-Lorain-Elyria, Ohio: $129,900
Akron, Oio: $129,000
Ocala, Fla: $129,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

HUD Extends Discrimination Protections

HUD Secretary Shaun Donovan is set to roll out a new agency policy to combat bias against lesbian, gay, bisexual, and transgender people in federally-supported housing programs.

The new rule aims to help LGBT people and their families remain in their residences, get loans to purchase homes, and access federal aid programs. They also include an equal access provision that prohibits owners and operators of HUD-funded or HUD-insured housing from asking about an applicant's gender identity or sexual orientation or denying housing for those reasons.

Source: "New HUD Policy Extends Discrimination Protections to Gay and Lesbian Community," Citybizlist Washington, D.C. (01/29/12)

Obama Extends Foreclosure Prevention Program Aid

The Obama administration will be expanding eligibility requirements for its foreclosure prevention program, the Home Affordable Modification Program (HAMP), to help more struggling home owners participate. 
The program will expand its eligibility requirements for those who may qualify for a loan modification, including how the debt ratio of mortgage borrowers is calculated as well as extending the program to owners of rental properties too.
HAMP will also triple the incentives it pays banks in order to get more banks to reduce the principal on loans, and it would offer incentives to Fannie Mae and Freddie Mac to reduce loan principals for those who participate in the program (previously only private lenders and banks were eligible for the incentives). 
However, the Federal Housing Finance Agency, which oversees Freddie and Fannie, says that while it will consider the HAMP changes, in a recent analysis it found "that principal forgiveness did not provide benefits that were greater than principal forbearance" -- a possible sign the GSEs may not support reducing the mortgage principal on loans, housing experts speculate. 
HAMP was first launched in 2009 and set out to help some 4 million struggling borrowers modify their loans, yet it has fallen short from its original goal. To date, HAMP has helped fewer than 1 million home owners. 
Some housing experts are optimistic that the changes to HAMP will allow more home owners to take part in the program, and that HAMP will help more “responsible home owners lower their costs and stay in their homes," Gene Sperling, the director of the National Economic Council, at a press conference.
The new changes to the program will take effect at the end of April. Also, the program has been extended to December 2013. 
Source: “Obama Administration Expands Foreclosure Prevention Program,” CNNMoney (Jan. 27, 2012)